Why the Pioneer Credit share price rocketed 20% higher today


The Pioneer Credit Ltd (ASX: PNC) share price has had a stunning start to the week.

In afternoon trade the Perth-based debt collector’s shares have returned from a trading halt and are up 20% to $2.36.

Why is the Pioneer Credit share price rocketing higher?

This morning Pioneer Credit requested a trading halt whilst it prepared a response to an article in the Australian Financial Review claiming that it was a takeover target.

An announcement out of the company this afternoon reveals that the article was on the money and Pioneer Credit has a number of suitors.

According to the release, the company has received several confidential, non-binding, indicative proposals.

The most comprehensive of these proposal is a non-binding, indicative proposal for the acquisition of all its issued shares by way of a scheme of arrangement.

Although no figures were put forward, management advised that it would be “at a material premium to the current share price.”

However, all the proposals are non-binding, indicative, and incomplete. They are also conditional on a number of items, including satisfactory completion of due diligence and board and regulatory approvals.

In addition to this, as the discussions are ongoing, management doesn’t regard them as sufficiently advanced enough to warrant further disclosure at this time.

As a result, it has warned shareholders that there is no certainty that any proposal will result in a binding and board-recommended offer and advised them not to take any action at this stage.

What now?

I think investors ought to heed the company’s advice and wait patiently for the situation to develop before taking any action.

In the meantime, if you’re looking for exposure to the industry you could consider buying the shares of debt collection giant Credit Corp Group Limited (ASX: CCP) or even Collection House Limited (ASX: CLH).

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019



Source link Finance News Australia

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